By Ross Norman
CEO, Sharps Pixley
Surely never before have so many lines been written by journalists on a subject that they palpably know so little about and have made little attempt to understand as the London gold fix.
Yesterday we were questioned by the BBC in a live TV interview which demonstrated the problem ; their belief was clearly that a group of bankers met in secret and arbitrarily decided what the price should be without reference to actual trades and that was the price for that day — they clearly were unaware that gold also has a spot price outside the fix and that almost all commodities have a benchmark or reference price. The lack of research ahead of the interview was shameful — but that did not prevent them for recycling hackneyed stereotypes about secretive banksters. They are not alone.
More laughably some authors suggest the gold price might rise if we dispensed with the fix — presumably on the notion that the banks have been artificially holding the price down — well who do you suppose creates the spot price that is your alternative — the same banks that are in the fixing room! In fact, you would be more likely see less participation in gold amongst institutional investors and possibly central banks if you removed those moments of deep liquidity that the fix provides. To boot, London will have lost one of its most prized institutions which is a massive contributor to the UK economy and the envy of centres such as Dubai, Shanghai, Mumbai and Singapore. British experts in the sector are global leaders in many fields from trade finance, structured deals, vaulting, refining assaying and we stand to lose primacy in the global bullion market simply because a bunch of tired and rather lazy hacks cannot be bothered to work it out.